In a new article written in the Charlotte Observer, Bob Ryan, the product-design and innovation executive for Wachovia’s credit-card division has the following to say about credit card foreign transaction fees: “While it was an easy revenue opportunity, we just didn’t think it was fair.” The article goes on:

The company calls credit cards a service for banking customers, and a profit center only secondarily.

Some smaller banks also refrain from imposing a surcharge, but the best deal is offered by Capital One Financial Corp., the fourth-largest card issuer. Foreign transactions are free. The company swallows the 1 percent fee.

Wachovia and Capital One say they make back the lost revenue by attracting customers and building loyalty, particularly among the small but affluent demographic of Americans frequently abroad.

The article is titled:

Beware credit-card fees on foreign buys

and tries to provide people a basic overview of what credit cards to use when traveling in foreign countries. It concludes with the following advice for people wandering what credit cards are bet for international travel:

Credit cards are the best way to make foreign currency purchases, travel experts say. Most charge a 3 percent fee, but that’s generally a lower rate than the alternatives. Still, regular travelers may want to find a card that charges a lower fee.

• Capital One charges nothing for transactions in any currency.

• Wachovia and some smaller banks charge 1 percent.

• American Express and banks including BB&T charge 2 percent.

Exercise caution if a merchant offers to convert the price to dollars. It seems like a way to avoid the surcharges. But the merchant is free to use a less favorable exchange rate, which can easily add more than 3 percent to the purchase price. Also, even though it’s called a conversion fee, some card companies charge it for any foreign transaction.

Though the article doesn’t use the words “dynamic currency conversion” speciffically, this is the process that takes place when a merchant offers to convert the local currency into your home currency at the point of sale. While this has the added advantage of allowing you to see the total price of your purchase at the point of sale, you are almost certain to get a worse rate with dynamic currency conversion if you are using one of the three credit cards above. American Express is a closed system and doesn’t allow additional dynamic currency conversion charges with their credit cards. With Visa and MasterCard merchants are supposed to allow customers to opt out of the dynamic currency conversion scheme, though some travelers have reported problems opting out. Merchants make money with each dynamic currency conversion transaction and therefore have incentive to pressure customers into opting in.

Click here to read the full article.